The Telecommunication Industry In Asia

Published Date: 02 Nov 2017

Service Analysis Report – Telecom Industry

Student Name: Gabriela Lengkong & Sabyasachi Chakraborty

Student ID: 9608516 & 4137175

Tutor Name: Nagia Bracic

Date: 30th January, 2013

MAR260 ASSIGNMENT COVER SHEET

DETAILS OF ASSIGNMENT

STUDENT NAMES:

IDS:

Gabriela Lengkong

Sabyasachi Chakraborty

9608516

4137175

UNIT CODE * NAME

MAR260 Services Marketing

ASSESSMENT TITLE / TOPIC

Service Analysis Report

TUTOR’S NAME:

Nagia Bracic

DATE OF SUBMISSION:

30th January, 2013

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Date:

Gabriela Lengkong

Sabyasachi Chakraborty

30th January, 2013

Table of Contents

Table of Contents 3

Executive summary 4

Introduction 5

Service marketing theories 7

Application of service marketing theories into the telecommunication industry in Asia 8

Service marketing flow theory 8

Market separation theory 9

Customer value proposition 11

Developing Service Products 12

Designing a Service Concept 13

Integration of Core Product, Supplementary Elements, and Delivery Process 13

Service Delivery and Servicescape 14

Pricing and Revenue Management 16

Why is Revenue Management Needed? 16

MARKET SEGMENT PRICING 18

FORECASTING DEMAND 18

What is the difference between Price Discrimination vs Product Differentiation? 19

What are the three possible steps in Achieving Revenue Management 19

Step 1: Analyse Market 19

Step 2: Understand Consumer Demand 20

Step 3: Align Pricing with Enterprise Objectives: 21

Revenue Management Benefits 21

How does Revenue Management Integrate with Existing Pricing Strategy? 22

Conclusion 24

References 25

Executive summary

A range of force shapes the service industry from globalization and increased competition to modularization of technology as well as business processes. Today, increased globalization and competition is calling for the service industry to enhance their service delivery through delivering cost effective services as well retaining highly seasoned professionals equipped to address the ever growing challenges within the service industry (Blythe, 2008). This involves ensuring that relevant service marketing theories are applied in service delivery and services cape. Application of relevant marketing theories will ensure there is more efficient resourcing that largely enhances value to its customers. This paper reviews the different service marketing theories that will ensure there is effective service delivery in the service industry with key focus on telecommunication in the Asian market. It will define as well as apply the different service marketing theories so as to enhance service delivery innovation. The paper concludes by outlining two recommendations on how professionals can apply the described theories so that they can have a more efficient competitive edge.

Introduction

The globe economy is presently being characterized as a service economy with key focus on the telecommunication sector. This is principally due to the ever increasing share and importance of the service sector in the economies of both developing and developed nations. Indeed, the growth of the service industry especially in the Asian continent has long been considered as indicative of the continent economic progress (Wells and Foxall, 2012). Faced with ever rising sophisticated consumers, technological advancement and increased globalization the telecommunication industry in Asia service industry need to widely evaluate their business model through effectively applying various services marketing theory in its service deliver and services cape (Blythe, 2008). Clearly, if the telecommunication industry in the Asian market continues to conduct business in the usual manner they will faced increased operation complexities, underleveraged partnerships and increased eroding profit margins. Evidently, to succeed in this industry, service firms such as telecommunication companies need to continually improve their service delivery so as to increase their profitability, client value while at the same time maintaining lower costs (Blythe, 2008).

Recently, Asia is experiencing a shift from product to service industry. Due to this reason there is need to put more focus in this industry especially through incorporating relevant marketing theories in it. Today, the services being offered by the telecommunication industry largely represent an essential part of the continent product thus increasing the representation of services continuum. Service marketing is a field in marketing which mainly focuses on service delivery. Service marketing has numerous theories that play a very important role in ensuring that the telecommunication industry in Asia has an efficient service delivery and services cape. Theories play an important role in enhancing both business to business (B2B) and business to consumer (B2C) services in the telecommunication industry. Clearly, coupling service marketing theories with service delivery and services cape will ensure the Asian telecommunication industry is in a better position to generate more value for their consumers, achieve a more competitive differentiation not forgetting higher profit margin making it a good investment to venture into (Hoffman and Bateson, 2011). An effective service delivery requires a service platform that is defined in the diagram below;

Figure 1: service delivery platform

Service marketing theories

Throughout the marketing field has largely directed attention to the field of service delivery and servicescape. Recently, much work has been centered on coupling relevant marketing theories on service delivery. The telecommunication is one of the growing service delivery industries in Asia. Therefore effectively applying marketing theories to this industry service delivery and servicescape, organization will be at a position to have well structured competitive edge thus increased profitability (Hoffman and Bateson, 2011). Within a telecommunication industry, service marketing theories indicate that consumer are provided with information in a more distinctive way so as to minimize the uncertainty associated with delivering communication services. Having a good background of knowledge of acquisition strategies, any individual having a desire to venture into telecommunication will make a good decision. Further, application of service marketing theories on to the Asian telecommunication service delivery will enhance customer propensity to seek information regarding the services being offered thus building stronger relationships between the customer and the telecommunication company. Customer value proposition plays an important role in application of service marketing theories.

Application of service marketing theories into the telecommunication industry in Asia

Service marketing flow theory

Application of service marketing theories will be considered to be efficient if customer value proposition is maintained. Flow theory plays an important role in enhancing service delivery within the telecommunication industry in that it ensure that information is distributed fright from the company management to its staff and finally to its clients. Here, telecommunication managers are required to pat a closer attention to information being distributed within the company and effectively interpret it to the various staff so as to maintain effective message distribution (Rama Moahana Rao, 2011). This theory calls for the telecommunication leaders in Asia to use their influential characteristics to change their clients’ behavior and behavior so as to ensure that clients are satisfied with the various services being used.

Figure 2: benefits of effective service delivery

Market separation theory

The theory of market separation plays an important role in understanding the importance of telecommunication service industry through outlining economic differentials in the Asian geographical as well as racial segments of the cities (Rama Moahana Rao, 2011). Evidently, application of this theory assists this service industry to understand both cultural and social characteristics of customer living in Asia. Both cultural and social characteristics are known to limit free mobility of services, information in two markets close in term of a nominally integrated and geographical sense (Crefeld, 2011). With Asia being one of the continents that has a mixed racial individuals living there, understanding the theory of market separation play an important role especially in enhancing a much stronger competitive advantage. Telecommunication industry needs to effectively use the marketing separation theory to come up with a model that will ensure that there is effective service delivery to all races found in Asia (Crefeld, 2011). Further, the industry can use the marketing separation theory to understand cultural, social and economic differences affecting the various races. This understanding ensures that there is free flow of information regarding the telecommunication industry thus creating satisfaction to all customers. The diagram below explains how marketing separation theory can be used by telecommunication industry to enhance service delivery;

Figure 3: Service delivery

It is difficult to achieve uniformity and standardization in services because of the invisibility of services and the human element that delivers the service. For this reason, telecommunication industry needs to effectively apply marketing spearing theory (Crefeld, 2011).

Customer value proposition

In today competitive business environment especially in the telecommunication sector, customer value proposition has become an important term especially in the Asian market. Evidently, service delivery and servicescape require customer value proposition to make profits while at the same time benefiting the telecommunication customers (Anderson et al, 2006). This theory plays an integral role in the Asian telecommunication industry since it consists of the total benefits that their clients will receive in return for clients associated payment. For the telecommunication industry, customer value proposition acts as an important tool that enhance service marketing thus ensuring that service delivery and servicescape efficiency. Customer value proposition enhances marketing theories which ensures that the telecommunication industry is balance in a manner that its service delivery to the Asian customer is effective (Lovelock et al. 2010).

The customer value proposition is the foundation for effective service marketing activities especially in the telecommunication industry. Clearly, customer value proposition brings together consumer intellect, competitive imminent and service valuation. Further, it assists the telecommunication industry to deliver a concise, acceptable statement of the service value. Using the above outline service marketing theories, customer proposition value quantifies how that assessment is realized based on all of the target consumer’s is expected service experiences (Lovelock et al. 2010). The customer value proposition widely provides a focused theoretical approach to understanding the target customer in the framework of your telecommunication service. Most telecommunication companies’ organizations have discovered that their survival depends exclusively not only on the products they offer, but also on the additional efforts they give their customers. These efforts or offers usually differentiate them from competitors. It is this Variety of activities practiced by various organizations is labeled as services. However, these organization successes majorly depend on delivering top notch quality service as well as creating value to its customers. Truly, it is difficult to define services because services are intangible, inseparable, variable, and perishable, and cannot be owned or transferred. They are also heterogeneous and cannot be returnable. Services only leave memories. It is necessary to understand the services characteristics because the borders between services and goods are haze as products and services are frequently sold as a unit (Clarke, 2000).

Developing Service Products

A service product comprises of all elements of service performance, both tangible and intangible, that create value for customers.

Service Product consists of:

Core Product: central component that supplies the principal, problem-solving benefits customers seek

Supplementary Services: augments the core product, where by it facilitates its use and thereby enhances its value and appeal

Delivery Processes: This is defined by delivering both the core product as well as each of the supplementary services

Designing a Service Concept

Before anything else, it must be noted that it is mandate to have a Service concept design which addresses the following issues:

How does different service components gets delivered to the customer

What is the nature of the customer’s role in those processes

How long would the delivery lasts

What is the recommended level and style of service to be offered

Integration of Core Product, Supplementary Elements, and Delivery Process

Service Delivery and Servicescape

Service Delivery can be defined as a service which involves six different conditions: [1] 

The accountable service provider and his service suppliers

Equipment used to provide the service

The physical facilities

The requesting service consumer

Other customers at the service delivery location

Customer contact

The process of service delivery is often as critical as defining the function of the service. Service is defined as a process from the organisation’s point of view, whereas an experience is from the customers’ perspective. The standard of the experience is a function of the carefully designed customer service processes, adopting the standardised procedures, rigorous management of service quality, high standards of training and automation.

Physical environment includes the appearance of buildings, landscaping, interior furnishing, equipment, uniforms, signs, printed materials and other visible cues that provide evidence of service quality and guide customers through the service process. The design on the physical environment can have a major contribution on customer satisfaction and service productivity.

In the service Industry, people are referred to as the employees of the company. From a customer’s point of view, when employees are involved, the people are the touch point for them to provide the necessary service. This can be ascertained that frontline employees need to possess the required technical and interpersonal skills along with positive attitude. People can be a key competitive advantage for many service Industries.

Services marketing include building customer loyalty, managing relationships, complaint handling, improving service quality and productivity of service operations, and how to become a service leader in your industry.

Servicescape is a concept that was developed by Booms and Bitner to emphasize the impact of the physical environment in which a service process takes place.

According to Booms and Bitner servicescape is defined as "the environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service".

Pricing and Revenue Management

Revenue Management is considered to be an economic discipline appropriate to many service industries where "market segment pricing" is combined with statistical analysis allowing it to expand the market for the service and at the same time increase the revenue "revenue" per unit of available capacity.

Why is Revenue Management Needed?

Consumers purchases products at an ever-widening range of retail outlets. Where companies previously had a small handful of competitors per market, they must now contend with numerous competitors per category, many of whom have complex offerings that include loyalty pricing, promotions, rebates, first-time shopper discounts and even auctions.

It is very complicated to find the right price since confrontation with volumes of information which provides the changing market conditions, thereby the retailers must continually differentiate their offerings, making hundreds of thousands, and in some cases millions, of strategic product-level decisions. The number and complexity of product-level decisions is growing exponentially as companies increase product selection and move from mass-market strategies to customer-centric strategies.

The intelligent way of using revenue management principles can be used to increase top line revenue and bottom line profitability in any service industry possessing the following characteristics [2] :

Demand for the service can be divided into clear market segments and sensitivity to prices varies among the market segments.

The firm’s capacity is relatively fixed; it is expensive or impractical to add or subtract inventory in the short run, though there may be some ability to shift it.

There is a time dimension to the provision of the service – once that time has passed, the inventory loses all of its value.

The cost of selling an additional unit of the existing capacity is low relative to the price of the service.

There is an opportunity to evaluate and accept or reject order requests in advance of the performance of the service,

There is considerable flexibility to adjust prices quickly to reflect variations in the balance of supply and demand.

There are definite peaks and valleys in demand, which can be predicted, but not with a high degree of certainty.

MARKET SEGMENT PRICING

The first step in a revenue management program is to define the various segments of the market for your service. Once that it established, then one can design ways in which you can charge different prices to the different market segments. The main aim is to expand the market and increase the company’s revenue potential by charging higher prices to those market segments which are not responsive to changes in price level and lower prices to those market segments which will respond to a price reduction by increasing their purchases by a large enough amount to more than offset the revenue reduction occasioned by the discount.

FORECASTING DEMAND

Once the market has been segmented as mentioned above and the initial rate structure has been put into place, other elements of revenue management come into the picture. The first of these is defined as the Demand Forecasting process, which is demand for the product reflects one or more regular patterns – either cyclic in nature (such as time -of-day, day-of-week or season-of-year), or trends (growth in demand due to growth in the economy at large), which can be projected forward in order to estimate future demand in each market segment.

What is the difference between Price Discrimination vs Product Differentiation?

Price discrimination:

The concept of having a price variation for the same product with same costs of production is solely based on different consumers’ "willingness to pay"

Product differentiation:

Charging different prices for products with different details impacts the cost of production.

What are the three possible steps in Achieving Revenue Management

Step 1: Analyse Market

Any competitive data is analysed in order to illuminate pricing strengths and weaknesses. By implementing a revenue management system allows the company to prepare competitive data, such as: in-store pricing, Internet pricing, market share, trade areas, etc., for business analysis

It is not necessary that all competitive prices would have the same "weight" in the market, and not that all competitors price each store alike Each competitor has a specific area of trade along with client base and cost structure that overlap with competitor trading areas, including the Internet. The mix of competitors and their respective differing strategies complicates the process of understanding competitive strengths and weaknesses.

Step 2: Understand Consumer Demand

Historical sales data which are based on factual information is the purest form of communication for a retailer by which it can be analyzed how to measure consumer trade-off decisions. If properly analysed, the data can reveal exactly how customers respond to price changes, promotions and other aspects of a retailer’s value proposition.

Revenue Management: More than Just Price Elasticity

Price elasticity is defined as the relationship between price and unit movement for a single product.

Each time a customer makes a purchase, the purchase constitutes as one data point. With multiple data points, it becomes possible to predict the units movement in the market thereby defining what price needs to be set for the product.

The major problem for retailers is that when price changes, since they are small in nature and at the same time accompanied by a promotion or some other event. Analysing the impact of price change without the knowledge of other external or internal factors that influence unit sales movement is likely to lead to incorrect and wring predictions.

Step 3: Align Pricing with Enterprise Objectives:

Employees are given visibility between enterprise revenue and profit goals, based on customer demand and market dynamics thereby enabling strategic decisions to be taken and this enables in making the prices optimized in order to meet the enterprise objectives.

Revenue Management Benefits

The following are the benefits by enabling Revenue Management to companies:

By align the right price with enterprise goals for revenue, profit and price image;

Maintaining a consistent long-term price image

Developing and implementing consistent pricing strategies

Simplify and accelerate pricing decisions

To capitalize on hidden revenue and demand opportunities in order to create recurring double-digit net profit improvements

How does Revenue Management Integrate with Existing Pricing Strategy?

In today’s retail organization scenario, there are three primary pricing strategies that are as follows:

Customer-driven pricing, which attempts in aligning the pricing of a product with the amount that the buyers are willing to pay;

Competitive-driven pricing, which allows competition to dictate what pricing will be

Value-based pricing, which maximizes the difference between the perceived value that is created for the customer and the cost incurred by an organization.

Recommendations

For the telecommunication industry to enhance service delivery and servicescape, it is important to incorporate relevant service marketing theories into its processes. In addition, the industry needs to understand key gaps in the service value perception model. The first gap is the knowledge gap or management perceptions versus Customers’ expectations. This gap occurs when managers fail to identify what customers expect from the service providers (Clarke, 2000). These result from inadequate market research to identify customer expectations, numerous layers of administration, and inadequate upward communication. The second is the design gap or service specifications versus Management perceptions. This occurs when the service design specifications does not match to management’s perception of customer expectations due to lack of obligation to service quality, absence of setting goals and lack of task standardization The third is service delivery versus service specifications also known as performance gap. This occurs when persons providing the service are affected by poor technology and unsuitable supervisory manage systems (Kossmann, 2006). The fourth being communication gap or external communication versus Service delivery occurs where customers promises are not delivered. This is affected by overpromising and insufficient horizontal communications. The fifth gap is the overall issues included in gap one to gap four. These discrepancies occur as a result of the pressures from the customer prospect and the service providers inadequacies. Clearly understanding these gaps will enable the industry to develop a well structured competitive edge.

RECOMMENDATIONS ON OPERATOR RETAIL STORES

Telecommunication operators around Asia are striving to reach market share, EBITDA target and revenue in an increasingly competitive business environment. In order to cut cost in the operator there is need to differentiating in key service marketing areas. The branded channel is very critical for any telecommunication industry as it is considered to be the fundamental point of contact with customer and the operator value chain. Further, operators require to manage their telecommunication services so as to effectively manage organization successfully around Human resource, trade promotion and stock optimization. Telecommunication operators need to focus on outsourcing. These will manage operators their finance expansion of the branded. The telecommunications operators need to assist their customers develop a more regional approach so as to have the ability to tap full potential of its point of sales. This approach assists customers to forecast local sales effectiveness thus pushing as well as adjusting marketing strategies.

Conclusion

Evidently, faced with ever rising sophisticated consumers, technological advancement and increased globalization the telecommunication industry in Asia service industry need to widely evaluate their business model through effectively applying various services marketing theory in its service deliver and services cape. Clearly, if the telecommunication industry in the Asian market continues to conduct business in the usual manner they will faced increased operation complexities, underleveraged partnerships and increased eroding profit margins. . Application of relevant marketing theories will ensure there is more efficient resourcing that largely enhances value to its customers.